Tax evasion remains rife among online sellers
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Many people earning huge incomes from online commercial activities do not pay tax until discovered by tax authorities. There were more than 1,100 individuals working as a software and online game developers in the capital, a study done by the Hanoi Department of Taxation in June found. They earned a combined VND4.8 trillion ($206 million) between 2017 and 2019, with one person earning VND140 billion ($6 million). No one paid any taxes until authorities discovered the extent of their earnings.
Sellers on Facebook and e-commerce platforms are also doing well thanks to a growing trend of online shopping. Recently authorities found a warehouse selling smuggled goods via Livestream with a turnover of VND650 billion ($27.8 million) in the last two years. The owner had not paid a single dong in taxes prior.
Tax officials said many businesses selling online have huge revenues but do not declare them or pay taxes. They include artists and celebrities, who, some claim have revenues of billions of dong.
According to the Ministry of Finance’s regulation, businesses or individuals with an annual income of VND100 million ($4,300) or more must pay value-added tax (VAT) and income tax.
But officials said assessing their incomes and collecting taxes from them is not easy. But things might be changing. New tax regulations that took effect in July gives the tax department the authority to ask banks for financial information about people who have income from online commercial activities.
Vu Manh Cuong, director of the General Department of Taxation’s inspection agency, said 45 commercial banks have been asked to provide information. “Tax evaders cannot escape forever and must pay up sooner or later once we obtain data from the banks.”
Those who do not declare and pay taxes also have to pay a fine of 0.03 percent per day for late payment.
According to the data provided by banks, in Hanoi alone, there are more than 18,300 organizations and individuals engaged in online sales with a total income of more than VND1.46 trillion ($62.66 million) from Google, Facebook, YouTube, and other platforms.
“Tax evaders cannot escape forever and must pay up sooner or later once we obtain data from the banks.”
The tax agency has asked them to pay nearly VND14 billion in taxes. It was also able to identify many businesses offering rental services like Booking, Agoda and Airbnb with revenues of more than VND5 trillion in the first eight months of this year and collected taxes of VND93 billion.
Cuong added that the State Bank of Vietnam’s banking supervision and inspection agency has identified 23 cases with suspicious transactions, including those where account holders receive money for advertising online or from Google, Facebook, and YouTube on behalf of others.
On September 28 the inspection agency reported to the tax department about these suspicious bank transactions, and an investigation is ongoing.
The census, which is due to be completed next July, will also help take a step toward making it easier for tax authorities to identify individuals who evade taxes.
But experts remain apprehensive it would be difficult to collect tax from online sellers, especially since many consumers prefer to pay cash.
Questions & Answers
Q.What threshold does the Ministry of Finance set for individuals or businesses to pay tax?
What threshold does the Ministry of Finance set for individuals or businesses to pay tax?
Individuals or businesses must pay value-added tax and income tax if their annual income is VND100 million ($4,300) or more. This regulation is set by the Ministry of Finance.
Q.What new power do tax departments have to identify online tax evaders?
What new power do tax departments have to identify online tax evaders?
New tax regulations from July allow the tax department to request financial information from banks about people with income from online commercial activities. This aims to help identify those evading taxes.
Q.What was the total income identified from online sales in Hanoi alone, according to bank data?
What was the total income identified from online sales in Hanoi alone, according to bank data?
In Hanoi alone, data from banks showed over 18,300 organisations and individuals engaged in online sales, with a total income exceeding VND1.46 trillion ($62.66 million) from various platforms.